The UK Treasury is moving to curb the Financial Ombudsman Service's authority as part of a broader deregulation push aimed at boosting economic growth. The reforms would limit the FOS's ability to rule against companies that comply with regulations and introduce a 10-year time limit for consumer complaints. Treasury officials say the changes will make redress clearer and more predictable for both consumers and businesses.

These measures follow mounting criticism of the FOS after its rulings on car finance mis-selling contributed to what's expected to be an £11 billion scandal for UK lenders. The Treasury's consultation found the ombudsman was creating uncertainty that was holding back investment. City Minister Lucy Rigby argued the reforms would restore confidence by setting clearer boundaries for the dispute resolution service.

Consumer groups have pushed back on some aspects, particularly the Treasury's plan to appoint the FOS chair rather than the Financial Conduct Authority. The FOS currently decides cases based on what's "fair and reasonable" but will now be required to consider regulatory compliance more heavily. The watchdog will also need to consult the FCA on ambiguous rules or cases with industry-wide implications. With over 305,000 complaints handled last year, the FOS is already implementing changes like pre-screening complaints and expanding dismissal powers before the government legislation takes effect.